A guide to money laundering legislation
| Published date | 01 January 2005 |
| Date | 01 January 2005 |
| Pages | 9-18 |
| DOI | https://doi.org/10.1108/13685200510621271 |
| Author | Robert Rhodes QC,Serena Palastrand |
| Subject Matter | Accounting & finance |
ANALYSIS
A Guide to Money Laundering Legislation
Robert Rhodes QC and Serena Palastrand
INTRODUCTION
Since 11th September, 2001, the UK government
have publicised internationally their denunciation of
terrorism, and their support for the `war on terrorism'.
As a result, attention is presently focused on the UK's
legislative and regulatory framework for combating
terrorist ®nancing.
The UK's commitment to this global goal is,
however, by no means new. Key steps in this drive
have been the 1988 Criminal Justice Act and the
1993 Money Laundering Regulations. The for-
mations of the Joint Money Laundering Steering
Group (JMLSG),
1
the Financial Services Authority
(FSA)
2
and the Financial Service and Markets Act
2000 (FSMA) have also been vital components of the
evolving anti-®nancial crime initiative.
For the purposes of this Guide,
3
the current system
of money laundering legislation is now predomi-
nantly contained within the Proceeds of Crime Act
2002 (POCA) and the Money Laundering Regu-
lations 2003 (MLR).
Most of the new statutory criminal law is contained
within Part 7 of POCA, which came into force on
24th February, 2003. POCA replaces all earlier
money laundering legislation (with the exception of
the terrorism legislation which had already been
enhanced by statute) and extends the remit of the
money laundering provisions from drug tracking,
terrorism and serious crime, to all crimes committed
on or after the implementation date. The position of
those alleged to have committed oences prior to
that date will still be governed by the previous Acts
that this legislation replaces.
The oences contained within Part 7 apply var-
iously to those in the regulated and non-regulated
sectors. The oences are set out in three parts: launder-
ing the proceeds of crime or assisting in that process,
failing to report a knowledge or suspicion of money
laundering, and tipping o.
POCA is supplemented by the new MLR, which
for all practical purposes came into force on 1st
March, 2004. The MLR have expanded on the 1993
Regulations and now aect a broader range of entities
which carry out relevant business (as de®ned within
the Regulations). The Regulations are only appli-
cable to new businesses, and they do not apply
retrospectively unless organisations are suspicious
about a client.
MONEY LAUNDERING
Money laundering is the process by which the proceeds
of crime and the true ownership of those proceeds are changed
so that the proceeds appear to come from a legitimate source.
4
This process consists of three stages that can be con-
ducted either at the same time in the course of a
single transaction, or in separate transactions. They
are placement, layering, and integration.
Placement is the ®rst stage (and most dangerous for
the launderer) in the laundering cycle. The aims of
the launderer are to take the cash from the location
of acquisition and then to transform it into other
asset forms, while avoiding detection from the
authorities.
Layering involves the creation of a complex web
of transactions aimed at dissociating the illegal
monies from their criminal origin. Such trans-
actions should not only prevent any audit trail
being left but also conceal the source and ownership
of funds.
Integration is the ®nal stage in the process, and
involves the introduction of the funds into the legiti-
mate economic and ®nancial system. This is accom-
plished by the launderer making the funds appear to
have been legally earned.
5
Principal money laundering oences
Substantive money laundering oences
pursuant to POCA
The three main oences are:
(a) Concealing the proceeds of criminal conduct
It is an oence for a person to conceal, disguise,
convert, transfer or remove `criminal prop-
erty'
6
from the UK (s. 327).
Page 9
Journal of Money Laundering Control Ð Vol. 8 No. 1
Journalof Money Laundering Control
Vol.8, No. 1, 2004, pp. 9± 18
HenryStewart Publications
ISSN1368-5201
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